NEW YORK (CNN/Money) -
U.S. retailers pulled a proverbial rabbit out of the hat in May, posting much stronger-than-expected sales across-the-board as new fashions, a thirst for the latest gadgets and gizmos and warm weather far outweighed concerns about higher gas prices and Iraq.
The results also appeared to have caught a few industry watchers off-guard.
"The numbers look pretty good so far," said Ken Perkins, retail analyst with First Call. "We are seeing more surprises to the upside and this is a nice reversal of the trend that we had expected last month. Even among those retailers who missed our forecast, not many of them blamed gas prices for it."
Michael Niemira, chief economist and director of research for the International Council of Shopping Centers (ICSC), agreed with Perkins views.
"The strong May performance goes a long way to dispel concerns about the impact of gas price increases on consumer spending," Niemira said. "I am surprised that the positive results were so widespread. It says 'Gee, the economic growth is clearly countering some of these other drags.'"
Added Niemira, "We thought the shift in the Memorial Day weekend this year to about a week later than last year could hurt holiday sales. That was only an isolated case. I think favorable weather probably had more of an impact that brought people out to stores to shop."
Wal-Mart results at high-end of forecasts
Wal-Mart Stores Inc. the world's largest retailer reported May sales up 5.9 percent, at the high end of the company's previous forecast for the 4-6 percent gain.
Net sales for the month rose 12.8 percent to $21.4 billion from $18.9 billion a year earlier.
Robust comparable sales at its Sam's Club division -- up 11.8 percent for the month -- clearly outpaced the slower 4.8 percent comparable gains at the retailer's Wal-Mart discount stores and boosted the overall monthly performance.
Wal-Mart had warned last month that the jump in gas prices was taking an average of $7 out of the typical Wal-Mart customer's disposable income each week.
For June, Wal-Mart (WMT: Research, Estimates) sees sales at stores open at least a year to be up in the 4 to 6 percent range. But the retailer cautioned that it expects a calendar shift in the July 4th holiday out of the June period and into July to hurt this month's sales by slightly less than 1 percent.
Discounter Target (TGT: Research, Estimates), the No. 2 discounter, said its sales rose 4.6 percent in May.
But higher prices at the pump benefited wholesale club operator Costco (COST: Research, Estimates). The company posted same-store sales up 16 percent, noting that higher gasoline prices added 1.35 percentage points to the company's same-store sales increase. Costco, which operates gas stations offering low-priced gas to its members, sold gas at an average of $2.02 a gallon in May, up from $1.51 a year ago.
Wholesale clubs clobbered the competition with their relatively lower gas prices, better merchandising, and increased customer acceptance of the wholesale club concept. The clubs are pulling shoppers--and along with them their wallets and gas-guzzling SUV's--into the parking lots of Costco, SAM's, and BJ's, all cranking out double-digit comp store sales in May. This trend is sustainable.
Specialty apparel companies were a standout in May. Among the big winners, teen apparel retailer Aeropostale (ARO: Research, Estimates) said sales soared 27 percent in May, beating analysts' estimates for a 13.4 percent gain in same-store sales. Also in the group, American Eagle Outfitters (AEOS: Research, Estimates) sales rose 10.6 percent, while Abercrombie & Fitch (ANF: Research, Estimates) reported same-store sales up 1 percent compared with analysts' forecast for a 0.6 percent increase.
Women's clothier Chico FAS (CHS: Research, Estimates) continued to fire ahead on all cylinders, posting same-store sales up 17.9 percent. The retailer has surprised on the upside in 13 out of the last 14 months.
"We note the strong gains have continued despite a climate of reduced levels of clearance merchandise and when, there are sales, lower discounting levels," Eric Beder, senior equity analyst with JB Hanauer & Co, said in a note Thursday. "We believe the consumer remains primed to shop when the looks are right; with fashion at probably its highest levels since post 9/11, we believe there remains upside on the fashion driven players."
Meanwhile, No.1 electronics retailer Best Buy (BBY: Research, Estimates) on Thursday reported an 8.3 percent rise in quarterly sales at stores open at least 14 months, citing soaring demand for CDs, DVD movies, digital cameras, notebook computers, MP3 players and flat-panel televisions.
Among department store chains, Plano, Texas-based J.C. Penney (JCP: Research, Estimates) posted a 9.1 percent rise in May same-store sales driven by a sales boost over Mother's Day. However, the retailer noted "concerns over the impact that higher energy prices" are having on the consumer.
But May Department Stores (MAY: Research, Estimates) struggled last month, with sales down 3.8 percent in May.
Another loser was Pier 1 Imports (PIR: Research, Estimates). The home furnishings retailer's sales declined 7.6 percent last month on the back of disappointing promotional events over Mother's Day weekend and Memorial Day. The retailer also cut its first-quarter earnings forecast to between 12 cents to 14 cents a share, down from its previous guidance of 14 cents to 17 cents a share.
|
